Gran Tierra Energy Inc. Announces Closing of an Additional $100 Million Aggregate Principal Amount of its 9.500% Senior Secured Amortizing Notes due 2029
Gran Tierra Energy Inc. has completed an offering of additional $100 million aggregate principal amount of its 9.500% Senior Secured Amortizing Notes due 2029. The Notes have the same terms and provisions as the Original Notes, except for the issue price, and form the same series as the Original Notes, including with respect to interest payments. The Notes are expected to trade under the same CUSIP number as the Original Notes. The company intends to use the net proceeds from the offering to repay the outstanding amounts borrowed under its existing credit facility and for general corporate purposes. The Notes will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.
The completion of the $100 million offering of senior secured amortizing notes by Gran Tierra Energy Inc. indicates a strategic move to restructure its debt profile. By repaying the existing credit facility and terminating it, the company aims to achieve a more favorable debt structure. The high-interest rate of 9.500% reflects the risk premium associated with the energy sector, particularly for exploration and production companies like Gran Tierra that may face volatile cash flows due to fluctuating commodity prices.
Investors should consider the implications of this debt issuance on the company's financial leverage and interest coverage ratios. While the immediate liquidity boost can facilitate growth and potentially enhance shareholder value, the increased debt burden could pose significant risks if energy prices decline or if the company faces operational setbacks. The alignment of the new notes' terms with those of the original notes suggests a coherent financial strategy, but the long-term success of this approach hinges on the company's ability to manage its increased debt load effectively.
The utilization of the net proceeds for general corporate purposes, including capital to appraise and develop exploration discoveries, indicates Gran Tierra's focus on growth through exploration and production activities. Given the cyclical nature of the energy market, the company's strategy to invest in exploration and development is pivotal. It reflects an attempt to capitalize on potential reserves and production capabilities, which could lead to increased revenues in the future.
However, the inherent risks of exploration activities, such as the uncertainty of finding commercially viable oil and gas reserves, must be weighed against the potential benefits. The company's ability to execute its exploration and development plans successfully will be a critical factor for investors to monitor, as it will significantly impact Gran Tierra's future cash flows and its ability to service the high-interest debt incurred through this offering.
From a market perspective, Gran Tierra's actions may signal confidence to investors and could potentially affect its stock market performance. The offering's success in a private placement suggests robust institutional interest, which could be interpreted as a positive market sentiment towards the company's creditworthiness and growth prospects.
However, the energy sector's susceptibility to geopolitical events, environmental policies and technological advancements in alternative energy sources adds layers of complexity to future projections. Investors should factor in these external influences when evaluating the potential impact of Gran Tierra's financial moves on its market valuation and stock performance. The strategic deployment of the raised capital in high-return projects will be crucial in determining the long-term benefits of this financial maneuver.
02/06/2024 - 05:05 PM
CALGARY, Alberta, Feb. 06, 2024 (GLOBE NEWSWIRE) -- Gran Tierra Energy Inc. (“Gran Tierra ” or the “Company ”) (NYSE American:GTE)(TSX:GTE)(LSE:GTE) today announced that it has completed its previously announced offering of an additional $100 million aggregate principal amount of its previously issued 9.500% Senior Secured Amortizing Notes due 2029 (the “Notes ”) in a private placement to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act ”), to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act, and pursuant to certain prospectus exemptions in Canada.
Gran Tierra previously had US$487,590,000 aggregate principal amount outstanding of its 9.500% Senior Secured Amortizing Notes due 2029 (the “Original Notes ”). The Notes have the same terms and provisions as the Original Notes, except for the issue price, and form the same series as the Original Notes, including with respect to interest payments. The Notes are expected to trade under the same CUSIP number as the Original Notes, except that the Notes sold pursuant to Regulation S under the Securities Act have a different CUSIP number than the Original Notes until 40 days after the issue date of the Notes.
The Notes are guaranteed by certain subsidiaries of Gran Tierra. Gran Tierra intends to use the net proceeds from the offering to repay the outstanding amounts borrowed under its existing credit facility (after which the credit facility will be terminated), and any remaining net proceeds from the offering for general corporate purposes, which may include additional capital to appraise and develop exploration discoveries, repayment of other indebtedness, working capital and/or acquisitions.
This press release does not constitute an offer to sell or the solicitation of an offer to buy the Notes, nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. The Notes will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.
The offering was made, and the Notes were offered and issued, only (a) in the United States to investors who are reasonably believed to be “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) in reliance upon the exemption from the registration requirements of the Securities Act, (b) outside the United States to investors who are persons other than “U.S. persons” (as defined in Rule 902 under the Securities Act) in reliance upon Regulation S under the Securities Act, and (c) pursuant to certain prospectus exemptions in Canada.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 or “forward-looking information” within the meaning of applicable Canadian securities laws. All statements other than statements of historical facts included in this press release, and those statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “would,” “could,” “should,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “guidance,” “budget,” “plan,” “objective,” “potential,” “seek,” or similar expressions or variations on these expressions are forward-looking statements. The Company can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct or that, even if correct, intervening circumstances will not occur to cause actual results to be different than expected. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause Gran Tierra’s actual results to differ materially from the forward-looking statements, including, but not limited to, statements related to Gran Tierra’s expectations regarding the use of proceeds of the offering; and those factors set out in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and in the Company’s other filings with the U.S. Securities and Exchange Commission. Although the Company believes the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. Investors should not rely upon forward-looking statements as predictions of future events. The information included herein is given as of the date of this press release and, except as otherwise required by the securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to, or to withdraw, any forward-looking statement contained in this press release to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.
ABOUT GRAN TIERRA ENERGY INC.
Gran Tierra Energy Inc. together with its subsidiaries is an independent international energy company currently focused on international oil and natural gas exploration and production with assets currently in Colombia and Ecuador. The Company is currently developing its existing portfolio of assets in Colombia and Ecuador and will continue to pursue additional growth opportunities that would further strengthen the Company’s portfolio. The Company’s common stock trades on the NYSE American, the Toronto Stock Exchange and the London Stock Exchange under the ticker symbol GTE.
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SOURCE Gran Tierra Energy Inc.
What is the purpose of Gran Tierra Energy's offering of additional $100 million aggregate principal amount of its 9.500% Senior Secured Amortizing Notes due 2029?
The company intends to use the net proceeds from the offering to repay the outstanding amounts borrowed under its existing credit facility and for general corporate purposes.
What are the terms and provisions of the Notes offered by Gran Tierra Energy?
The Notes have the same terms and provisions as the Original Notes, except for the issue price, and form the same series as the Original Notes, including with respect to interest payments.
Are the Notes offered by Gran Tierra Energy registered under the Securities Act or the securities laws of any other jurisdiction?
The Notes will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.
